December 12, 2025 • 38 mins
Chuck Zodda and Paul Lane discuss Broadcom shares sinking despite record revenue. How resilient will the US consumer be without a job? AI shopping could drive $263B in holiday sales. Fiber is shaping up to be the next grocery obsession. Is silver the next gold?
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Episode Transcript
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Speaker 1 (00:00):
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(00:42):
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donation today. This is the Financial Exchange with Chuck Zada
(01:06):
and Paul.
Speaker 2 (01:06):
Lane, Chuck, Paul, and Tucker with you here on Friday
the twelfth.
Speaker 3 (01:17):
We almost had it.
Speaker 2 (01:18):
But in any case, we're here and we've got some
stuff to talk about. Some of it involves money, some
of it involves finance.
Speaker 3 (01:32):
Money talks me more money.
Speaker 2 (01:35):
And we're gonna kick things off with a talk about
a company that's currently worth less money than yesterday, and
that is Broadcom. They reported earnings after the bell yesterday
and again kind of like we've seen from a couple
of these, uh, you know, semiconductor companies over the course
of the quarter. The actual numbers weren't bad, but there's
(01:58):
some stuff maybe just that is spooking investors about what
the future looks like. And so Broadcom stock, which was
down about five percent after hours in pre market, now
sitting here today down almost ten percent on the day, discuss.
Speaker 3 (02:16):
Yeah.
Speaker 4 (02:16):
So I think what you mentioned there earlier is really
one of the big takeaways is that the bar for
these companies that are tied to the artificial intelligence business
is really high. The hurdles have been raised to a
significant level. To be clear, Broadcome was up sixty one
percent year to date, so important to kind of put
that context it had swelled over a trillion dollars their
(02:37):
solid year for them. It's been a really good year
for them. They've exceeded a trillion dollar market cap, so
things have gone quite well. I do think what you
were mentioning is the reason for some of the sell
off today is investors are a little bit jitterly. They're
expecting the world and these numbers, like you pointed out,
were tremendous. Some of the reasons that I'm going to
highlight as the potential investor concerns that I am not
(02:59):
overly concerned, but just to get a sense for why
we're seeing this sell off could be and this is
just theoretical. They did mention in some of their guidance
that they expect a little bit lower margins going forward
next year, losing a percent or so on the margin
business as they create more and more artificial intelligence chips
on the design side. Those are lower margins than some
(03:19):
of their legacy businesses that were more accustomed to your
phone chips, Bluetooth, et cetera. Those are a little bit
higher margin than some of these artificial intelligence ones. Another one,
and this one is not something that they mentioned in
the earnings call, but something that has just been sort
of in the investment ether over the course of the
last few days or so is Google. They have the
(03:39):
TPU chips, which we've talked about on the program before.
They are probably the biggest competitor to Invidia's Stellar chip
that goes into all of these data centers to power chat,
GPT and all artificial intelligence malls. Broadcom is the one
who designs those chips for Google, and they take a
pretty healthy margin out of that design effort. They did
get the next contract, so Broadcong's still in line to
(04:00):
work side by side with Google. However, Google is exploring
working with potentially other designers out there for future generations
of their chips. Perhaps that is some of the concern
that lingers out there that Google is really scrutinizing ways,
like all these artificial intelligence companies to reduce their reliance
on companies like Broadcoms so that they can be as
(04:21):
efficient with all of the costs that go into this
development of artificial intelligence as possible. So those could be
some of the reasons why you're seeing a bit of
a self I do think from a longer term perspective,
we're going to get to a point with these models
Chucks where they are going to become so sophisticated that
the training exercise is going to be less and less necessary.
(04:43):
And in Nvidia is really behind a lot of the
training just how powerful their chips are, and there will
be an opportunity for companies like Broadcom to design other
sorts of chips that are going to be sort of
lesser versions are not as powerful as in Vidia's chips.
So from a longer term perspective, I don't think that
this earnings is, you know, dramatically bad, but it's just
(05:05):
reflective of sort of a high bar environment that we're in.
Speaker 2 (05:08):
It's a company that's trading thirty nine times forward earnings,
twenty times forward sales and has margins right now of
forty percent, which is.
Speaker 3 (05:17):
Not the norm for computer hardware.
Speaker 2 (05:21):
Like you just again, this stuff all gets commoditized, and
I want to make the case right now that what
we are seeing in the last three or four months
of this year is that commoditization process that's happening. Tucker,
can you fire up the time machine stand bye? I
want to take us make sure you give it enough fuel.
(05:42):
We're going back to nineteen ninety five, all right, it's
nineteen ninety five. Microsoft has released Windows ninety five, and
everyone is getting all happy on you know, the very
start of the tech bubble and the thing that we
had I've seen over the prior like five or six
(06:03):
years in the tech space. The nineties were the decade
of the PC rollout. Like that was the dominant feature
of tech in the nineteen nineties and specifically all of
the IBM compatible PCs that.
Speaker 3 (06:15):
Were running Windows.
Speaker 2 (06:16):
And originally, like in the nineties, you had a couple
manufacturers that hey, they'd have, you know, an annual release
and here's you know, our computers for the next year,
and then okay, here's our next ones. And basically in
the mid nineties and ninety five, everything changed because a
ton of money poured into the space looking at the
margins that were there, and you got all these companies
(06:38):
that just started trying to make PCs because they shot
all the money that was being made. I mean you're talking.
You had, you know, Dell, HP, Compac Gateway, I can't remember,
like there were dozens of them out there, and basically
what ended up happening in order to compete, they started
moving to faster and faster releases so like updating their
(07:01):
catalog more frequently, they started cutting pricing, and in the end,
most of those companies ended up either having to merge
with other ones or they went out of business. Like
you look at who actually makes IBM compatible you know,
Windows compatible PCs these days, there's like three or four
names that are left. They either absorbed the other ones
(07:22):
or the other ones died off. That's just kind of
how it went. And I just look at the last
month now, and you know, Google comes out with its
new Gemini and says, oh, this is the best model ever.
And then yesterday open Ai says, no, like by point
two's here, we ran our code red you know program
for the last few weeks cause you know, Sam Altman
(07:45):
ordered the code red and hey, this is even better now.
And ultimately, like what this is in my mind is, hey,
these these companies are now having to actually compete on product,
which means that you've got to do it cheaper, faster
and better than the other guys. And that is how
commoditization happens. This is ultimately a good thing for all
(08:07):
of us who may use these products. Definitely unfortunately for
the companies that sell them or that sell the hardware
that goes into them. It means that those margins are
going to have to compress because you have to do
more with less, you have to compete, and in doing so,
that's what typically happens. And so I think that's kind
(08:28):
of the you know, one of the other realizations that
is creeping in now, which is, hey, if there are
going to be multiple ways to do this, using multiple
technologies and needing to actually compete to win market share
and not just being like, hey, open ai is the
only game in town. Man, that's a competition that normally
(08:50):
compresses compresses margins, and margin compression means less profit per
unit sold. And now you've got to make it up
on volume. Yeah, exactly, And and and that's where we are,
I think, in the early stages of realizing. And the
problem here is and this is why Oracle got bludgeoned yesterday. Here,
(09:13):
here's the deal with the two types of two ways
that you can finance this. You can finance this through
equity raising equity in which case, hey, if someone invests
in your company and you're the winner, okay, like yes,
there could be untold trillions you could make. And if
you invest in the loser then you lose your money,
and that's you know it, that's that's fine. But ultimately,
if you pick like five or six AI companies and
(09:35):
do equity investments into them, you could say, yeah, I
could do pretty well because that one winner is going
to make me a bunch and who cares what happens
to the losers.
Speaker 3 (09:43):
The problem is that.
Speaker 2 (09:44):
A lot of this financing is now starting to happen
on the debt side of things, and debt doesn't have
that upside. Like if if you invest in, if you
lend a million dollars to six companies and five of
them go belly up, you don't look at the winner
and say, well, my million there turned into six million. No,
Like you went a million dollars, you get back a
(10:05):
million with the interest. But it's not going to be
like that. It's not going to be enough. So what
the market I think is also waking up to, and
this was you know, the case of Oracle yesterday, is hey, you're,
you know, raising an awful lot of debt to try
to do this and you may not be the one
who ends up winning. And your debt costs are rising,
(10:28):
your capex is rising as a percentage of revenue, Your
depreciation is rising as a percentage of revenue, and you
got to start selling some more stuff otherwise this is
going to be a problem. And so these are the
realizations that the market is having with AI. These can
be solved, but it's going to take a lot of
sales growth in a short period of time or a
(10:49):
pulling back of some of the capex plans.
Speaker 4 (10:52):
Which I don't think that's gonna happen in any In
any case, really, I.
Speaker 2 (10:55):
Think you got to go full steam ahead because the
only way out is through exactly exactly.
Speaker 4 (11:00):
If you don't do it, you're probably likely to crash
and burn. So you may as well burn the boats
and just give it all you got and oracles case,
make it up on volume, like that's what you have
to do.
Speaker 2 (11:09):
The next two years are going to be wild on this,
and it's like these are the two years where it's
going to start to matter, and we're going to see
the actual winners and losers decided in twenty six and
twenty seven. In my opinion, let's take a quick break
when we come back. Uh, that's enough AI for now.
Let's talk a little bit about how resilient the US
consumer can.
Speaker 3 (11:30):
Be without a job. Let's do that. When we return.
Speaker 1 (11:33):
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Speaker 5 (11:58):
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(12:32):
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Speaker 2 (12:37):
Peace in Bloomberg opinion by Connor sen It's titled how
Resilient will the US Consumer be Without a job? And
basically what it's talking about is that when you look
at how companies are talking about their twenty twenty six plans,
there's not a ton of room for labor force expansion
in them if you you know, try to figure out,
you know, where their profits are going to come from
(13:00):
with you know, the projected revenues, and so you know,
he makes the point specifically looking at housing home Depot
gave guidance that pretty much shows no real revenue growth
and only slightly better earnings growth next year. Told Brothers,
a major US home builder, particularly on the high end,
guided that they're going to deliver fewer homes next year
and have a smaller backlog than they've had, so they're
(13:21):
going to build less. This is stuff we've been talking
about for the last couple of weeks, and so you know,
we're in this curious place where, again, like you, you
look at the actual data that we have as it
relates to you know, wages and what's being earned by people,
and the best place that I have to find that
(13:44):
you know, in real time is with the fightah withholding
that is the Treasury releases a statement every day showing, hey,
here's what was paid into FIKA by employers and employees.
And basically, what we've seen is that the pace of
growth in FIICA withholding year over year has gone from
(14:04):
the mid sevens at the middle of the year down
to you know, the low threes through November. And that's
pretty consistent with no real growth in payrolls. The reason
being think about, you know, the employer that you work for.
You might be coming in this time of year and
they say, hey, we're going to give you, you know, a
three percent bump and pay or a two percent bump
(14:25):
and pay, and so three percent you know, payroll tax
withholding growth year over year pretty much implies that there's
not really any job growth that's happening. And despite this,
consumer spending has remained robust. And there are reasons that
we've talked about where this may be true or why
this may be true.
Speaker 3 (14:44):
Number one, a.
Speaker 2 (14:45):
Larger portion of the population today is retired. They're not
dependent on their wages, they live on Social Security and
income off their portfolio. Sure, and social Security doesn't get cut,
you know, it doesn't shift downward. And portfolio years have
been up this year, so that can support consumer spending.
So I think that when you look at this, the
(15:07):
question is, Look, we're still consistently seeing across all these
different platforms four to six percent year over year spending
growth from American consumers. Connor's asking the question, can that
continue if the labor market keeps worstening? And it's a
valid question, but the data that we have in hand
right now shows that, at least to this point, the
(15:29):
worstening labor market has not ended up being reflected in
worsening consumer demand.
Speaker 4 (15:35):
We had talked about this sommrule concept last fall, when
unemployment increased by over a half percent from the troth
that had found itself in coming out of twenty twenty two,
where the labor market was in a tremendous place, and
typically with this summrule, the idea was that if you
were to exceed that half percent increase in unemployment that
looking back in history, that would trigger a recession. At
(15:57):
this point, given how long it's been since we last
cover that a year plus, I sit in a position
where I would be more open to the idea check
that perhaps the labor market could slightly worsen next year.
Now I know the argument could be made that that's
not usually how the labor market goes. It's usually not
a slower worsening. It's usually think of a snowball rolling
down the hill. It goes fast and furious and it's
(16:19):
hard to stop. But I'm more open to that possibility
because of the spending trends that we've examined throughout this year,
which defy a lot what's going on on the labor
market side. And you hit on a couple of reasons
as to why that's the case. Markets have been tremendous
over the course of the last three years. For all
those retirees, that's been a huge boom. And for those
higher income consumers out there, they're invested in the markets too,
(16:40):
so that also is a benefit to them. So it's
a great question that he poses, and I would say
on our end of things, probably one of the biggest
focuses for next year is the artificial intelligence trade itself.
That's powering a lot of economic growth and opportunity, and
it's the labor market. If I were to narrow down
two things that you're just looking at heading into Tour
twenty six, those would probably be my top two.
Speaker 2 (17:03):
Yeah, it's look you've got this tug of war that's
gonna happen next year. These are the lines that you're
the battle lines as I see them. On the weakening
side of things, you've got a labor market and a
housing market that have some problems. Right on the strength
side of things, you've got the provisions from the one
big beautiful bill that are gonna kick in next year
(17:25):
that are gonna be helpful, and AI continuing to power through.
And the question is going to be which side gives
because right now, like if you look at it, you
can see it's just kind of this tug of war,
and there's a plausible path for the economy to worsen
next year, there's a possible path for it to get better.
And I do think the window of weakness for it
is in the front half of the year, because I
(17:46):
tend to believe once you start getting larger tax refunds
that are coming through and things like that, that likely
starts to juice up, you know, consumer spending heading into
the summer, but not in.
Speaker 3 (17:58):
The fall of the following year. Yeah. Correct, So I.
Speaker 2 (18:00):
Think that ultimately it's kind of okay, like, what does
the balance between these look like? And it could be
a timing thing as much as anything, where it's like, hey,
the labor market was set to worse and further, but
then that extra spending kicked in and kept us from
going there. Or if labor goes in January, maybe it's
too early and then the extra spending boost isn't enough
(18:22):
to help. Can I ask you one question. I know
we're run up against break here at tariff story. Do
we think that's dead?
Speaker 4 (18:27):
Because we had really said that hey by December of
this year, if we're not seeing impact on the pricing front,
we haven't mentioned inflation, as you and I have gone
back and forth here for concerns for twenty twenty six,
is it dead and gone pretty close? I would say
I think it is.
Speaker 2 (18:40):
And the reason why is that, ultimately, like all of
us live and experience these things through how they change,
and once they're in place for you know, basically a
full year, you sit there and you say, okay, we've
absorbed this, and now like that's kind of a baseline
that we're competing against, you know, relative it's kind of
(19:01):
it's look at it in terms of housing, just as
an example, housing in twenty twenty two went from selling
six million units a year down to around four million.
Once you're down at four million and just selling that
in subsequent years, it's neither a net drag or a
net help for the economy.
Speaker 3 (19:18):
It just is steady.
Speaker 2 (19:21):
I kind of view the tariffs the same way and that, yeah,
they were a net drag this year, They're not going
to be a larger net drag next year, and so
it's it's neutral on the economy at that point. Quick
break Wall Street watches next.
Speaker 1 (19:41):
Like us on Facebook and follow us on Twitter at
TFE show. Breaking business news is always first right here
on the Financial Exchange Radio Network. Time now for Wall Street.
Watch a complete look and what's moving market so far
today right here on the Financial extra Change Radio Network.
Speaker 5 (20:01):
Tech sector seeing a pullback again today as investors react
to more tech earnings from Broadcom, which impressed. By the way.
We also have some major news coming out of the
retail space this morning. Right now, the Dow is off
only seven points, mostly flat, SMP five hundred down two
thirds of a percent or forty five points. Nasdaq is
(20:23):
selling off over one percent or two hundred and sixty points.
Rusted two thousand is down over a quarter percent. Tenure
treasure reeled is up one basis point. Oh wait, no
it's not. CNBC is doing that weird thing again. I'll
get that for you later. Don't worry about now. What
do you got, Chuck? It's up four point three basis points.
Thank you very much, appreciate that. I'll never forget this.
(20:43):
And the crude oil is down six tenths of one percent,
trading at fifty seven dollars and twenty five cents a barrel.
Well Broadcom is dropping ten percent, despite the chip maker
beating earnings in revenue expectations driven by AI sales. The
company also issued a strong forecast for the current quarter,
expecting AI chip sales to double from a year earlier.
(21:05):
Is AI demand remained strong again. Broadcom down by ten percent. Meanwhile,
at leisure where retailer Lululemon announced CEO Calvin McDonald will
step down in January. In a statement, Lulu said its
board is focused on identifying a leader with the track
record of driving companies through periods of growth and transformation
to guide the company's next chapter of success. Lululemon also
(21:29):
beat street forecasts on both lines for its previous quarter.
That stock is rallying nearly ten percent. Elsewhere, Furniture company
URH reported mixed third quarter results and narrowed its annual
sales outlook towards the lower end of its range. The
company noted tariffs had resulted in product delays, items out
of stock, and price increases. Shares in RH are up
(21:52):
eleven percent. Costco recorded higher quarterly revenue from membership fees
as it aims to open more warehouses to drive growth.
Cost goes down nearly one percent, and several cannabis stocks
are rallying, falling reports that President Trump is expected to
direct his administration to move to reclassify marijuana as a
less dangerous drug. Shares in both till very brands and
(22:14):
cannopy Growth are surging twenty three percent higher.
Speaker 1 (22:18):
On that news, I'm.
Speaker 5 (22:19):
Tucker Silva and that is Wall Street Watch, and remember
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Speaker 2 (22:40):
AI shopping could drive two one hundred and sixty three
billion dollars in holiday sales. Walmart and Target are racing
to get in. That's the headline from CNBC. It's talking
about global holiday sales this year, so not you know,
in the United States, but basically, Salesforce is saying that
I'll amost a quarter of all holiday orders could be
(23:02):
driven by AI. Now, this is going to be a
very informal survey of a very small number of people.
But are either of you using artificial intelligence to do
your Christmas shopping this year?
Speaker 3 (23:13):
No?
Speaker 1 (23:14):
Not at all.
Speaker 4 (23:16):
Am I heavily involved in Christmas shopping like grocery shopping? No,
So the answer is a no, free okay, but no
biomission because I'm just not in No.
Speaker 2 (23:24):
That's fine though, so I think here's I'm not either.
By the way, do either of you use AI on
a regular basis right now?
Speaker 3 (23:33):
Yes? No?
Speaker 2 (23:35):
Okay, good Paul, give me like I'll give you my
examples of stuff that I tend to use it for. Yesterday,
I was I had done some grocery shopping earlier this
week and was going to be making some sweet potatoes yesterday,
but instead I saw some yams at the grocery store,
and my two year old daughter sitting in the cart
(23:57):
heard me say the word yam, and she's still sar
going yummy, yammy, yummy yamy. And so we had to
buy the yams instead of the sweet potatoes. And so
just before dinner last night, my wife asked me, Hey,
what what's the difference between a yam and a sweet potato?
And rather than going to Google, where I would have
had to like find like that, I pulled up you know,
(24:18):
chat Cheepatina. I was like, what's the difference between this?
And it gave me like the four key differences. Yams
have thicker skin, their starts here. They're actually an entirely
different uh family of plants from sweet potatoes, which I.
Speaker 3 (24:29):
Didn't know, but like, it gave me that pretty easily.
Speaker 2 (24:34):
Or I might ask, hey, you know, what are the
tax brackets for next year, just so I don't have
to look through eight web pages and you know whatever.
So I use it more for just finding basic information
than making decisions about my life at this point. And
I'm curious if you're similar or difference.
Speaker 3 (24:52):
I'm similar.
Speaker 4 (24:52):
The examples I would give to you are similar ones
where my son, you know, has a lot of trains around.
He asked, what is this part of the train? Take
a picture of it? Hey, what is this part that?
And I give a couple of specifications there. I had
a nice bottle of wine the house that someone had
left there that I opened on Sunday night, and I
was like, oh, I'm not really familiar with this one.
Chat GPT. Here, here's a picture of this bottle of wine.
(25:13):
Tell me what it's like, you know, give me a
little bit of background on it that I wouldn't be
able to grab before all that type of stuff, workout stuff. Hey,
I just ate a big Thanksgiving meal. What's a good
way to try and burn some of this out that
that kind of conversation. But I do think from things
that I've listened to from other podcasters and people out there,
that it's going to get to a point if you're
looking for revenue, if you're open, aye, this is where
(25:34):
you clip it. And it's the same business model as Google.
But ads are coming. Ads are coming. They're coming big time,
hard and heavy, I bet. Because for the example of
let's say you want to buy your niece. This is
sited in the piece here a gift that is fifty
bucks and these are the four things that she likes.
Give me some examples chat ept of something that would
fit under these constraints. You better believe that there's going
(25:57):
to be a link there to Walmart or Target or
whatever fits the It.
Speaker 3 (26:00):
Might even be buy right through there with an integration.
Speaker 4 (26:02):
And that's what I think it's gonna I think it's
going that way, and they're gonna take viig. They're going
to take a commission off of the fact that they
just gave Walmart or Target, whoever. And I've heard it
for travel too. That's been another one that is going
to come that way. Restaurant reservations. It's kind of getting
to that point where it's going to act as an
assistant and that's how they will take revenue. And I
(26:23):
sit here reading this piece, I'm like, so, if you're Google,
how relieved you are that you're at least in the game,
because if we're having this conversation and a year ago,
it would not have been as optimistic of a picture
because that is their whole game, right, this is what
we would do previously to answer your daughter's question about
the yams or my sons about the train parts Google,
That's where I would have gone.
Speaker 2 (26:44):
And I do think it's also important to note though
this is not new revenue to these companies. This is
them basically trying to hold on to the revenue that
would just like be going through a different channel.
Speaker 3 (26:56):
YEP.
Speaker 2 (26:56):
So it's kind of like, hey, if you're not there,
you're not you don't have a chance.
Speaker 3 (27:01):
SEO is the.
Speaker 4 (27:01):
Big term, right, Search engine optimization. Now the new one
that I just read in this piece is is AEO,
which now I'm blanking what the A was, but maybe
our professional intelligence it's something along those lines.
Speaker 3 (27:12):
We'll go with that.
Speaker 4 (27:13):
You basically have to position yourself to be picked up
by these searches if you want to continue to grow.
Speaker 3 (27:20):
That's really AEO.
Speaker 1 (27:22):
Is that what you said?
Speaker 4 (27:23):
Answer engine optimization, it's all the valels. I got it.
Speaker 5 (27:27):
It's answer engine optimization. That's it, Google says, American Eagle Outfitters.
Speaker 2 (27:31):
Well, that is the ticker for well, actually the ticker
there's a song about this.
Speaker 3 (27:37):
EI EIO and on that.
Speaker 2 (27:40):
Farm there was no, that's not it. Anyways, here's the
other question that I do have. How am I going
to know I'm being advertised to by AI. Let's say,
as an example, I ask, hey, what's a good you know,
give me a list of good fast casual restaurants that
(28:05):
I can get a meal at for under this price point.
Speaker 3 (28:10):
If company X is.
Speaker 2 (28:13):
Paying open AI why dollars a year, is it going
to say that as like the first option preference and
is it going to have to disclose that that was
a paid advertisement or am I just going to think, no,
this is what AI is saying as the preferred option.
Speaker 4 (28:32):
They'll probably have to replicate Google's playbook of you know,
sponsored posts, which is like, that's the people paying to
be at the top of the page, and Google's algorithm approach,
which is a combination of who is doing this the
best that comes up that fits the bill, but also
a little bit of who's going to pay the most
that auction style system for this placement on the page.
Speaker 2 (28:52):
Because like the insidious thing is when you're when you're Googling,
you at least see, okay, here's like these results. Right
If this is just if I asked chat GPT, hey
where should I get a stake and it just says, oh,
you should go to the Capitol grill. You just how
do I know that that's actually what I should do
to go? You know, like how do I know that
they didn't just that who owns them?
Speaker 3 (29:14):
It's a arden.
Speaker 2 (29:16):
How do I know the darden didn't just write a
big old check and say yeah, like if asked, X
respond capital grill, so like that, because if it's just conversational,
you're kind of like, Okay, what do I do here?
And other platforms have figured out how to deal with
this if you're on social media, which I'm not like
any more, Like I don't really do it anymore if
(29:39):
you're on social media, at least the way I remember it.
If someone was doing a paid ad, they indicated in
the post that it was a paid the cad And
so we're going to get some kind of you know,
disclosure that needs.
Speaker 3 (29:51):
To happen around that. But is it required by law?
Is it just no?
Speaker 2 (29:56):
We think this is best practice. Like this is where
things get a little bit murky for me in trying
to navigate that kind of stuff.
Speaker 3 (30:05):
But I thought this was, I don't know, interesting.
Speaker 2 (30:08):
Just take a quick break when we come back. We're
talking two things that you wouldn't think fit together, fiber
and silver, and they don't fit together, but we'll discuss
them together after.
Speaker 1 (30:18):
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Speaker 2 (31:18):
Okay, PCE and CNBC Fiber, The Next Protein and the
next grocery obsession. Apparently this is what all the big
food companies are working on the last year or two,
they've spent a whole bunch of money trying to get
more protein into their food. Now they're trying to get
more fiber into their food. And I gotta tell you,
(31:39):
I am very pro fiber. Love the stuff, eat it
every day, can't get enough of it. But here's what
I know about food. I know enough to know that
no one's entirely sure how the human body and digestive
system actually work, and that when you take specific micro
(32:02):
nutrients out of kind of the macro picture and lifestyle
from which they normally come from, you don't normally get
the exact same results. And so I'm always a little
bit skeptical whenever something becomes like the next big trend,
because my general rule of thumb is, hey, just wait
twenty years and whatever they said was bad becomes good.
And so my basic starting point is, hey, don't eat
(32:24):
too much, try to eat a mix of different things,
and you know you'll generally end up working out fine.
But it does appear that we're about to get a
real kick in the fiber next year, and so that'll
be fun.
Speaker 4 (32:37):
I'm all with you on fiber, though, some of the
areas that they plan to be launching in. I'm not
sure as if this is the place I'd be looking
for it. Smart food, fiber pop featuring six grands of
protein per serving, sun Chips, fiber incorporating fiber variants like
whole grans and whole glarient, whole grains and black beans e.
I don't know if those are that.
Speaker 3 (32:58):
I'm very pro bean.
Speaker 4 (33:00):
I'm very anti been, Paul's anti been, but it's a
good fiber source.
Speaker 5 (33:03):
I feel like we went through this phase by the way,
because yeah, I feel like in like I don't know,
middle school or something, like everything was fiber branded.
Speaker 2 (33:12):
Just wait twenty years and like it all goes to
the circle.
Speaker 3 (33:15):
Yeah, yeah, you know. So I don't know.
Speaker 2 (33:17):
I am very pro fiber, and I think it's great
that you can maybe get fiber in more places. But
I remained skeptical that this is more anything more than
just kind of marketing, because it's, Hey, we're a food
company that is showing declining sales.
Speaker 3 (33:35):
How can we get people excited?
Speaker 2 (33:37):
But in a different way, Okay, like, yeah, look at
all the fiber in here, as opposed to Hey, I
went to the grocery store, and I bought a cann
of beans for a dollar fifteen, and I got all
the fiber I need, and I look great.
Speaker 5 (33:52):
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Speaker 2 (35:15):
I do think that the bean is actually basically the
ultimate food, high protein, high fiber, low glycemic index.
Speaker 3 (35:24):
Which bean do you prefer?
Speaker 2 (35:25):
So I've done, I've done a bean taste test. Actually okay,
and I am very much on team kidney bean. Okay,
preferably the dark kidney beans.
Speaker 3 (35:35):
Not my chili though, but keep going. I do.
Speaker 2 (35:37):
I do darks in my in my chili, my black bean. No,
my chili is dark red kidney beans and then black beans.
Speaker 5 (35:45):
I'm a no bean and chili guy. I do two
beans in the chili, just two single beans, yes, two.
If you find them, you get ten dollars. That's the goal.
Is silver, the new gold. This is the question that's
posed by the Financial Times, Paul, Have you been practicing
any alchemy lately?
Speaker 4 (36:03):
I haven't, but I'm so glad you guys did that
being a little sidetrack because there was a tickle on
my throne and I was just barely holding on. So
perhaps it was one that didn't want to go down.
Silver has been woo crushing it, just absolutely crushing it
this year. Gold's up sixty percent year to date, and
(36:24):
silver over the last I believe trailing twelve months has
doubled in price. And so if you're in Germany and
looking forward to your collective commemora of silver coins at
the Christmas issuance of the Three Wise Men, unfortunately that
has been canceled this year cancels. Prices have swelled so
much on those coins.
Speaker 3 (36:45):
Why didn't they just raise the prices.
Speaker 4 (36:49):
Well, they're giving them out, Oh they give them yes, yeah,
so they're eating the cost of the double cost.
Speaker 3 (36:55):
Oh god, yes.
Speaker 4 (36:59):
Germany's finance ministry took a remarkable step and canceled the
long planned Christmas issuance of the Three Wise Men. It's
a commemorative silver coin and a second less festive silver
token celebrating monoails.
Speaker 3 (37:13):
Monoails, What is that? What is happening here? Great question?
Speaker 2 (37:23):
So yeah, look, here's the thing. I don't know anything
at all about how these silver market actually functions. It
is not something where I am educated in any way,
shape or form, and I know enough to know that
there are plenty of different games that can be played
in markets, and if you don't understand, you're best not
commenting on it or participating in them. And so that's
(37:43):
generally the way that I tend to go. Having said that,
from you know, talking with people that are more knowledgeable
than myself in that area, it does seem like there
is a real industrial squeeze because there just is not
enough silver that's being produced and that's driving this in
addition to some retail speculation. Eventually, both of those things
(38:04):
do end up breaking, and generally in commodity markets, those
breaks don't end well. But I have no idea when, where,
or how that will be. Let's take a quick break
when we return our two coming up in just a
little bit.
The Financial Exchange is produced by Money Matters Radio and
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(00:20):
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(01:06):
and Paul.
Speaker 2 (01:06):
Lane, Chuck, Paul, and Tucker with you here on Friday
the twelfth.
Speaker 3 (01:17):
We almost had it.
Speaker 2 (01:18):
But in any case, we're here and we've got some
stuff to talk about. Some of it involves money, some
of it involves finance.
Speaker 3 (01:32):
Money talks me more money.
Speaker 2 (01:35):
And we're gonna kick things off with a talk about
a company that's currently worth less money than yesterday, and
that is Broadcom. They reported earnings after the bell yesterday
and again kind of like we've seen from a couple
of these, uh, you know, semiconductor companies over the course
of the quarter. The actual numbers weren't bad, but there's
(01:58):
some stuff maybe just that is spooking investors about what
the future looks like. And so Broadcom stock, which was
down about five percent after hours in pre market, now
sitting here today down almost ten percent on the day, discuss.
Speaker 3 (02:16):
Yeah.
Speaker 4 (02:16):
So I think what you mentioned there earlier is really
one of the big takeaways is that the bar for
these companies that are tied to the artificial intelligence business
is really high. The hurdles have been raised to a
significant level. To be clear, Broadcome was up sixty one
percent year to date, so important to kind of put
that context it had swelled over a trillion dollars their
(02:37):
solid year for them. It's been a really good year
for them. They've exceeded a trillion dollar market cap, so
things have gone quite well. I do think what you
were mentioning is the reason for some of the sell
off today is investors are a little bit jitterly. They're
expecting the world and these numbers, like you pointed out,
were tremendous. Some of the reasons that I'm going to
highlight as the potential investor concerns that I am not
(02:59):
overly concerned, but just to get a sense for why
we're seeing this sell off could be and this is
just theoretical. They did mention in some of their guidance
that they expect a little bit lower margins going forward
next year, losing a percent or so on the margin
business as they create more and more artificial intelligence chips
on the design side. Those are lower margins than some
(03:19):
of their legacy businesses that were more accustomed to your
phone chips, Bluetooth, et cetera. Those are a little bit
higher margin than some of these artificial intelligence ones. Another one,
and this one is not something that they mentioned in
the earnings call, but something that has just been sort
of in the investment ether over the course of the
last few days or so is Google. They have the
(03:39):
TPU chips, which we've talked about on the program before.
They are probably the biggest competitor to Invidia's Stellar chip
that goes into all of these data centers to power chat,
GPT and all artificial intelligence malls. Broadcom is the one
who designs those chips for Google, and they take a
pretty healthy margin out of that design effort. They did
get the next contract, so Broadcong's still in line to
(04:00):
work side by side with Google. However, Google is exploring
working with potentially other designers out there for future generations
of their chips. Perhaps that is some of the concern
that lingers out there that Google is really scrutinizing ways,
like all these artificial intelligence companies to reduce their reliance
on companies like Broadcoms so that they can be as
(04:21):
efficient with all of the costs that go into this
development of artificial intelligence as possible. So those could be
some of the reasons why you're seeing a bit of
a self I do think from a longer term perspective,
we're going to get to a point with these models
Chucks where they are going to become so sophisticated that
the training exercise is going to be less and less necessary.
(04:43):
And in Nvidia is really behind a lot of the
training just how powerful their chips are, and there will
be an opportunity for companies like Broadcom to design other
sorts of chips that are going to be sort of
lesser versions are not as powerful as in Vidia's chips.
So from a longer term perspective, I don't think that
this earnings is, you know, dramatically bad, but it's just
(05:05):
reflective of sort of a high bar environment that we're in.
Speaker 2 (05:08):
It's a company that's trading thirty nine times forward earnings,
twenty times forward sales and has margins right now of
forty percent, which is.
Speaker 3 (05:17):
Not the norm for computer hardware.
Speaker 2 (05:21):
Like you just again, this stuff all gets commoditized, and
I want to make the case right now that what
we are seeing in the last three or four months
of this year is that commoditization process that's happening. Tucker,
can you fire up the time machine stand bye? I
want to take us make sure you give it enough fuel.
(05:42):
We're going back to nineteen ninety five, all right, it's
nineteen ninety five. Microsoft has released Windows ninety five, and
everyone is getting all happy on you know, the very
start of the tech bubble and the thing that we
had I've seen over the prior like five or six
(06:03):
years in the tech space. The nineties were the decade
of the PC rollout. Like that was the dominant feature
of tech in the nineteen nineties and specifically all of
the IBM compatible PCs that.
Speaker 3 (06:15):
Were running Windows.
Speaker 2 (06:16):
And originally, like in the nineties, you had a couple
manufacturers that hey, they'd have, you know, an annual release
and here's you know, our computers for the next year,
and then okay, here's our next ones. And basically in
the mid nineties and ninety five, everything changed because a
ton of money poured into the space looking at the
margins that were there, and you got all these companies
(06:38):
that just started trying to make PCs because they shot
all the money that was being made. I mean you're talking.
You had, you know, Dell, HP, Compac Gateway, I can't remember,
like there were dozens of them out there, and basically
what ended up happening in order to compete, they started
moving to faster and faster releases so like updating their
(07:01):
catalog more frequently, they started cutting pricing, and in the end,
most of those companies ended up either having to merge
with other ones or they went out of business. Like
you look at who actually makes IBM compatible you know,
Windows compatible PCs these days, there's like three or four
names that are left. They either absorbed the other ones
(07:22):
or the other ones died off. That's just kind of
how it went. And I just look at the last
month now, and you know, Google comes out with its
new Gemini and says, oh, this is the best model ever.
And then yesterday open Ai says, no, like by point
two's here, we ran our code red you know program
for the last few weeks cause you know, Sam Altman
(07:45):
ordered the code red and hey, this is even better now.
And ultimately, like what this is in my mind is, hey,
these these companies are now having to actually compete on product,
which means that you've got to do it cheaper, faster
and better than the other guys. And that is how
commoditization happens. This is ultimately a good thing for all
(08:07):
of us who may use these products. Definitely unfortunately for
the companies that sell them or that sell the hardware
that goes into them. It means that those margins are
going to have to compress because you have to do
more with less, you have to compete, and in doing so,
that's what typically happens. And so I think that's kind
(08:28):
of the you know, one of the other realizations that
is creeping in now, which is, hey, if there are
going to be multiple ways to do this, using multiple
technologies and needing to actually compete to win market share
and not just being like, hey, open ai is the
only game in town. Man, that's a competition that normally
(08:50):
compresses compresses margins, and margin compression means less profit per
unit sold. And now you've got to make it up
on volume. Yeah, exactly, And and and that's where we are,
I think, in the early stages of realizing. And the
problem here is and this is why Oracle got bludgeoned yesterday. Here,
(09:13):
here's the deal with the two types of two ways
that you can finance this. You can finance this through
equity raising equity in which case, hey, if someone invests
in your company and you're the winner, okay, like yes,
there could be untold trillions you could make. And if
you invest in the loser then you lose your money,
and that's you know it, that's that's fine. But ultimately,
if you pick like five or six AI companies and
(09:35):
do equity investments into them, you could say, yeah, I
could do pretty well because that one winner is going
to make me a bunch and who cares what happens
to the losers.
Speaker 3 (09:43):
The problem is that.
Speaker 2 (09:44):
A lot of this financing is now starting to happen
on the debt side of things, and debt doesn't have
that upside. Like if if you invest in, if you
lend a million dollars to six companies and five of
them go belly up, you don't look at the winner
and say, well, my million there turned into six million. No,
Like you went a million dollars, you get back a
(10:05):
million with the interest. But it's not going to be
like that. It's not going to be enough. So what
the market I think is also waking up to, and
this was you know, the case of Oracle yesterday, is hey, you're,
you know, raising an awful lot of debt to try
to do this and you may not be the one
who ends up winning. And your debt costs are rising,
(10:28):
your capex is rising as a percentage of revenue, Your
depreciation is rising as a percentage of revenue, and you
got to start selling some more stuff otherwise this is
going to be a problem. And so these are the
realizations that the market is having with AI. These can
be solved, but it's going to take a lot of
sales growth in a short period of time or a
(10:49):
pulling back of some of the capex plans.
Speaker 4 (10:52):
Which I don't think that's gonna happen in any In
any case, really, I.
Speaker 2 (10:55):
Think you got to go full steam ahead because the
only way out is through exactly exactly.
Speaker 4 (11:00):
If you don't do it, you're probably likely to crash
and burn. So you may as well burn the boats
and just give it all you got and oracles case,
make it up on volume, like that's what you have
to do.
Speaker 2 (11:09):
The next two years are going to be wild on this,
and it's like these are the two years where it's
going to start to matter, and we're going to see
the actual winners and losers decided in twenty six and
twenty seven. In my opinion, let's take a quick break
when we come back. Uh, that's enough AI for now.
Let's talk a little bit about how resilient the US
consumer can.
Speaker 3 (11:30):
Be without a job. Let's do that. When we return.
Speaker 1 (11:33):
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Speaker 2 (12:37):
Peace in Bloomberg opinion by Connor sen It's titled how
Resilient will the US Consumer be Without a job? And
basically what it's talking about is that when you look
at how companies are talking about their twenty twenty six plans,
there's not a ton of room for labor force expansion
in them if you you know, try to figure out,
you know, where their profits are going to come from
(13:00):
with you know, the projected revenues, and so you know,
he makes the point specifically looking at housing home Depot
gave guidance that pretty much shows no real revenue growth
and only slightly better earnings growth next year. Told Brothers,
a major US home builder, particularly on the high end,
guided that they're going to deliver fewer homes next year
and have a smaller backlog than they've had, so they're
(13:21):
going to build less. This is stuff we've been talking
about for the last couple of weeks, and so you know,
we're in this curious place where, again, like you, you
look at the actual data that we have as it
relates to you know, wages and what's being earned by people,
and the best place that I have to find that
(13:44):
you know, in real time is with the fightah withholding
that is the Treasury releases a statement every day showing, hey,
here's what was paid into FIKA by employers and employees.
And basically, what we've seen is that the pace of
growth in FIICA withholding year over year has gone from
(14:04):
the mid sevens at the middle of the year down
to you know, the low threes through November. And that's
pretty consistent with no real growth in payrolls. The reason
being think about, you know, the employer that you work for.
You might be coming in this time of year and
they say, hey, we're going to give you, you know, a
three percent bump and pay or a two percent bump
(14:25):
and pay, and so three percent you know, payroll tax
withholding growth year over year pretty much implies that there's
not really any job growth that's happening. And despite this,
consumer spending has remained robust. And there are reasons that
we've talked about where this may be true or why
this may be true.
Speaker 3 (14:44):
Number one, a.
Speaker 2 (14:45):
Larger portion of the population today is retired. They're not
dependent on their wages, they live on Social Security and
income off their portfolio. Sure, and social Security doesn't get cut,
you know, it doesn't shift downward. And portfolio years have
been up this year, so that can support consumer spending.
So I think that when you look at this, the
(15:07):
question is, Look, we're still consistently seeing across all these
different platforms four to six percent year over year spending
growth from American consumers. Connor's asking the question, can that
continue if the labor market keeps worstening? And it's a
valid question, but the data that we have in hand
right now shows that, at least to this point, the
(15:29):
worstening labor market has not ended up being reflected in
worsening consumer demand.
Speaker 4 (15:35):
We had talked about this sommrule concept last fall, when
unemployment increased by over a half percent from the troth
that had found itself in coming out of twenty twenty two,
where the labor market was in a tremendous place, and
typically with this summrule, the idea was that if you
were to exceed that half percent increase in unemployment that
looking back in history, that would trigger a recession. At
(15:57):
this point, given how long it's been since we last
cover that a year plus, I sit in a position
where I would be more open to the idea check
that perhaps the labor market could slightly worsen next year.
Now I know the argument could be made that that's
not usually how the labor market goes. It's usually not
a slower worsening. It's usually think of a snowball rolling
down the hill. It goes fast and furious and it's
(16:19):
hard to stop. But I'm more open to that possibility
because of the spending trends that we've examined throughout this year,
which defy a lot what's going on on the labor
market side. And you hit on a couple of reasons
as to why that's the case. Markets have been tremendous
over the course of the last three years. For all
those retirees, that's been a huge boom. And for those
higher income consumers out there, they're invested in the markets too,
(16:40):
so that also is a benefit to them. So it's
a great question that he poses, and I would say
on our end of things, probably one of the biggest
focuses for next year is the artificial intelligence trade itself.
That's powering a lot of economic growth and opportunity, and
it's the labor market. If I were to narrow down
two things that you're just looking at heading into Tour
twenty six, those would probably be my top two.
Speaker 2 (17:03):
Yeah, it's look you've got this tug of war that's
gonna happen next year. These are the lines that you're
the battle lines as I see them. On the weakening
side of things, you've got a labor market and a
housing market that have some problems. Right on the strength
side of things, you've got the provisions from the one
big beautiful bill that are gonna kick in next year
(17:25):
that are gonna be helpful, and AI continuing to power through.
And the question is going to be which side gives
because right now, like if you look at it, you
can see it's just kind of this tug of war,
and there's a plausible path for the economy to worsen
next year, there's a possible path for it to get better.
And I do think the window of weakness for it
is in the front half of the year, because I
(17:46):
tend to believe once you start getting larger tax refunds
that are coming through and things like that, that likely
starts to juice up, you know, consumer spending heading into
the summer, but not in.
Speaker 3 (17:58):
The fall of the following year. Yeah. Correct, So I.
Speaker 2 (18:00):
Think that ultimately it's kind of okay, like, what does
the balance between these look like? And it could be
a timing thing as much as anything, where it's like, hey,
the labor market was set to worse and further, but
then that extra spending kicked in and kept us from
going there. Or if labor goes in January, maybe it's
too early and then the extra spending boost isn't enough
(18:22):
to help. Can I ask you one question. I know
we're run up against break here at tariff story. Do
we think that's dead?
Speaker 4 (18:27):
Because we had really said that hey by December of
this year, if we're not seeing impact on the pricing front,
we haven't mentioned inflation, as you and I have gone
back and forth here for concerns for twenty twenty six,
is it dead and gone pretty close? I would say
I think it is.
Speaker 2 (18:40):
And the reason why is that, ultimately, like all of
us live and experience these things through how they change,
and once they're in place for you know, basically a
full year, you sit there and you say, okay, we've
absorbed this, and now like that's kind of a baseline
that we're competing against, you know, relative it's kind of
(19:01):
it's look at it in terms of housing, just as
an example, housing in twenty twenty two went from selling
six million units a year down to around four million.
Once you're down at four million and just selling that
in subsequent years, it's neither a net drag or a
net help for the economy.
Speaker 3 (19:18):
It just is steady.
Speaker 2 (19:21):
I kind of view the tariffs the same way and that, yeah,
they were a net drag this year, They're not going
to be a larger net drag next year, and so
it's it's neutral on the economy at that point. Quick
break Wall Street watches next.
Speaker 1 (19:41):
Like us on Facebook and follow us on Twitter at
TFE show. Breaking business news is always first right here
on the Financial Exchange Radio Network. Time now for Wall Street.
Watch a complete look and what's moving market so far
today right here on the Financial extra Change Radio Network.
Speaker 5 (20:01):
Tech sector seeing a pullback again today as investors react
to more tech earnings from Broadcom, which impressed. By the way.
We also have some major news coming out of the
retail space this morning. Right now, the Dow is off
only seven points, mostly flat, SMP five hundred down two
thirds of a percent or forty five points. Nasdaq is
(20:23):
selling off over one percent or two hundred and sixty points.
Rusted two thousand is down over a quarter percent. Tenure
treasure reeled is up one basis point. Oh wait, no
it's not. CNBC is doing that weird thing again. I'll
get that for you later. Don't worry about now. What
do you got, Chuck? It's up four point three basis points.
Thank you very much, appreciate that. I'll never forget this.
(20:43):
And the crude oil is down six tenths of one percent,
trading at fifty seven dollars and twenty five cents a barrel.
Well Broadcom is dropping ten percent, despite the chip maker
beating earnings in revenue expectations driven by AI sales. The
company also issued a strong forecast for the current quarter,
expecting AI chip sales to double from a year earlier.
(21:05):
Is AI demand remained strong again. Broadcom down by ten percent. Meanwhile,
at leisure where retailer Lululemon announced CEO Calvin McDonald will
step down in January. In a statement, Lulu said its
board is focused on identifying a leader with the track
record of driving companies through periods of growth and transformation
to guide the company's next chapter of success. Lululemon also
(21:29):
beat street forecasts on both lines for its previous quarter.
That stock is rallying nearly ten percent. Elsewhere, Furniture company
URH reported mixed third quarter results and narrowed its annual
sales outlook towards the lower end of its range. The
company noted tariffs had resulted in product delays, items out
of stock, and price increases. Shares in RH are up
(21:52):
eleven percent. Costco recorded higher quarterly revenue from membership fees
as it aims to open more warehouses to drive growth.
Cost goes down nearly one percent, and several cannabis stocks
are rallying, falling reports that President Trump is expected to
direct his administration to move to reclassify marijuana as a
less dangerous drug. Shares in both till very brands and
(22:14):
cannopy Growth are surging twenty three percent higher.
Speaker 1 (22:18):
On that news, I'm.
Speaker 5 (22:19):
Tucker Silva and that is Wall Street Watch, and remember
you can watch the show live every day on our
YouTube page. We'll have breaking business news and all of
our content is also archived, so if you want to
go see an interview or discussion about a specific topic,
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Speaker 2 (22:40):
AI shopping could drive two one hundred and sixty three
billion dollars in holiday sales. Walmart and Target are racing
to get in. That's the headline from CNBC. It's talking
about global holiday sales this year, so not you know,
in the United States, but basically, Salesforce is saying that
I'll amost a quarter of all holiday orders could be
(23:02):
driven by AI. Now, this is going to be a
very informal survey of a very small number of people.
But are either of you using artificial intelligence to do
your Christmas shopping this year?
Speaker 3 (23:13):
No?
Speaker 1 (23:14):
Not at all.
Speaker 4 (23:16):
Am I heavily involved in Christmas shopping like grocery shopping? No,
So the answer is a no, free okay, but no
biomission because I'm just not in No.
Speaker 2 (23:24):
That's fine though, so I think here's I'm not either.
By the way, do either of you use AI on
a regular basis right now?
Speaker 3 (23:33):
Yes? No?
Speaker 2 (23:35):
Okay, good Paul, give me like I'll give you my
examples of stuff that I tend to use it for. Yesterday,
I was I had done some grocery shopping earlier this
week and was going to be making some sweet potatoes yesterday,
but instead I saw some yams at the grocery store,
and my two year old daughter sitting in the cart
(23:57):
heard me say the word yam, and she's still sar
going yummy, yammy, yummy yamy. And so we had to
buy the yams instead of the sweet potatoes. And so
just before dinner last night, my wife asked me, Hey,
what what's the difference between a yam and a sweet potato?
And rather than going to Google, where I would have
had to like find like that, I pulled up you know,
(24:18):
chat Cheepatina. I was like, what's the difference between this?
And it gave me like the four key differences. Yams
have thicker skin, their starts here. They're actually an entirely
different uh family of plants from sweet potatoes, which I.
Speaker 3 (24:29):
Didn't know, but like, it gave me that pretty easily.
Speaker 2 (24:34):
Or I might ask, hey, you know, what are the
tax brackets for next year, just so I don't have
to look through eight web pages and you know whatever.
So I use it more for just finding basic information
than making decisions about my life at this point. And
I'm curious if you're similar or difference.
Speaker 3 (24:52):
I'm similar.
Speaker 4 (24:52):
The examples I would give to you are similar ones
where my son, you know, has a lot of trains around.
He asked, what is this part of the train? Take
a picture of it? Hey, what is this part that?
And I give a couple of specifications there. I had
a nice bottle of wine the house that someone had
left there that I opened on Sunday night, and I
was like, oh, I'm not really familiar with this one.
Chat GPT. Here, here's a picture of this bottle of wine.
(25:13):
Tell me what it's like, you know, give me a
little bit of background on it that I wouldn't be
able to grab before all that type of stuff, workout stuff. Hey,
I just ate a big Thanksgiving meal. What's a good
way to try and burn some of this out that
that kind of conversation. But I do think from things
that I've listened to from other podcasters and people out there,
that it's going to get to a point if you're
looking for revenue, if you're open, aye, this is where
(25:34):
you clip it. And it's the same business model as Google.
But ads are coming. Ads are coming. They're coming big time,
hard and heavy, I bet. Because for the example of
let's say you want to buy your niece. This is
sited in the piece here a gift that is fifty
bucks and these are the four things that she likes.
Give me some examples chat ept of something that would
fit under these constraints. You better believe that there's going
(25:57):
to be a link there to Walmart or Target or
whatever fits the It.
Speaker 3 (26:00):
Might even be buy right through there with an integration.
Speaker 4 (26:02):
And that's what I think it's gonna I think it's
going that way, and they're gonna take viig. They're going
to take a commission off of the fact that they
just gave Walmart or Target, whoever. And I've heard it
for travel too. That's been another one that is going
to come that way. Restaurant reservations. It's kind of getting
to that point where it's going to act as an
assistant and that's how they will take revenue. And I
(26:23):
sit here reading this piece, I'm like, so, if you're Google,
how relieved you are that you're at least in the game,
because if we're having this conversation and a year ago,
it would not have been as optimistic of a picture
because that is their whole game, right, this is what
we would do previously to answer your daughter's question about
the yams or my sons about the train parts Google,
That's where I would have gone.
Speaker 2 (26:44):
And I do think it's also important to note though
this is not new revenue to these companies. This is
them basically trying to hold on to the revenue that
would just like be going through a different channel.
Speaker 3 (26:56):
YEP.
Speaker 2 (26:56):
So it's kind of like, hey, if you're not there,
you're not you don't have a chance.
Speaker 3 (27:01):
SEO is the.
Speaker 4 (27:01):
Big term, right, Search engine optimization. Now the new one
that I just read in this piece is is AEO,
which now I'm blanking what the A was, but maybe
our professional intelligence it's something along those lines.
Speaker 3 (27:12):
We'll go with that.
Speaker 4 (27:13):
You basically have to position yourself to be picked up
by these searches if you want to continue to grow.
Speaker 3 (27:20):
That's really AEO.
Speaker 1 (27:22):
Is that what you said?
Speaker 4 (27:23):
Answer engine optimization, it's all the valels. I got it.
Speaker 5 (27:27):
It's answer engine optimization. That's it, Google says, American Eagle Outfitters.
Speaker 2 (27:31):
Well, that is the ticker for well, actually the ticker
there's a song about this.
Speaker 3 (27:37):
EI EIO and on that.
Speaker 2 (27:40):
Farm there was no, that's not it. Anyways, here's the
other question that I do have. How am I going
to know I'm being advertised to by AI. Let's say,
as an example, I ask, hey, what's a good you know,
give me a list of good fast casual restaurants that
(28:05):
I can get a meal at for under this price point.
Speaker 3 (28:10):
If company X is.
Speaker 2 (28:13):
Paying open AI why dollars a year, is it going
to say that as like the first option preference and
is it going to have to disclose that that was
a paid advertisement or am I just going to think, no,
this is what AI is saying as the preferred option.
Speaker 4 (28:32):
They'll probably have to replicate Google's playbook of you know,
sponsored posts, which is like, that's the people paying to
be at the top of the page, and Google's algorithm approach,
which is a combination of who is doing this the
best that comes up that fits the bill, but also
a little bit of who's going to pay the most
that auction style system for this placement on the page.
Speaker 2 (28:52):
Because like the insidious thing is when you're when you're Googling,
you at least see, okay, here's like these results. Right
If this is just if I asked chat GPT, hey
where should I get a stake and it just says, oh,
you should go to the Capitol grill. You just how
do I know that that's actually what I should do
to go? You know, like how do I know that
they didn't just that who owns them?
Speaker 3 (29:14):
It's a arden.
Speaker 2 (29:16):
How do I know the darden didn't just write a
big old check and say yeah, like if asked, X
respond capital grill, so like that, because if it's just conversational,
you're kind of like, Okay, what do I do here?
And other platforms have figured out how to deal with
this if you're on social media, which I'm not like
any more, Like I don't really do it anymore if
(29:39):
you're on social media, at least the way I remember it.
If someone was doing a paid ad, they indicated in
the post that it was a paid the cad And
so we're going to get some kind of you know,
disclosure that needs.
Speaker 3 (29:51):
To happen around that. But is it required by law?
Is it just no?
Speaker 2 (29:56):
We think this is best practice. Like this is where
things get a little bit murky for me in trying
to navigate that kind of stuff.
Speaker 3 (30:05):
But I thought this was, I don't know, interesting.
Speaker 2 (30:08):
Just take a quick break when we come back. We're
talking two things that you wouldn't think fit together, fiber
and silver, and they don't fit together, but we'll discuss
them together after.
Speaker 1 (30:18):
This miss any of the show catch up at your
convenience by visiting Financial Exchange Show dot com and clicking
the on demand icon, where you'll find all of our
interviews in full shows. This is your home for the
latest business and financial news in New England and around
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(30:39):
is your home for the most comprehensive coverage of the
economy and the trends on Wall Street. This is the
Financial Exchange Radio Network.
Speaker 5 (30:49):
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(31:11):
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Speaker 2 (31:18):
Okay, PCE and CNBC Fiber, The Next Protein and the
next grocery obsession. Apparently this is what all the big
food companies are working on the last year or two,
they've spent a whole bunch of money trying to get
more protein into their food. Now they're trying to get
more fiber into their food. And I gotta tell you,
(31:39):
I am very pro fiber. Love the stuff, eat it
every day, can't get enough of it. But here's what
I know about food. I know enough to know that
no one's entirely sure how the human body and digestive
system actually work, and that when you take specific micro
(32:02):
nutrients out of kind of the macro picture and lifestyle
from which they normally come from, you don't normally get
the exact same results. And so I'm always a little
bit skeptical whenever something becomes like the next big trend,
because my general rule of thumb is, hey, just wait
twenty years and whatever they said was bad becomes good.
And so my basic starting point is, hey, don't eat
(32:24):
too much, try to eat a mix of different things,
and you know you'll generally end up working out fine.
But it does appear that we're about to get a
real kick in the fiber next year, and so that'll
be fun.
Speaker 4 (32:37):
I'm all with you on fiber, though, some of the
areas that they plan to be launching in. I'm not
sure as if this is the place I'd be looking
for it. Smart food, fiber pop featuring six grands of
protein per serving, sun Chips, fiber incorporating fiber variants like
whole grans and whole glarient, whole grains and black beans e.
I don't know if those are that.
Speaker 3 (32:58):
I'm very pro bean.
Speaker 4 (33:00):
I'm very anti been, Paul's anti been, but it's a
good fiber source.
Speaker 5 (33:03):
I feel like we went through this phase by the way,
because yeah, I feel like in like I don't know,
middle school or something, like everything was fiber branded.
Speaker 2 (33:12):
Just wait twenty years and like it all goes to
the circle.
Speaker 3 (33:15):
Yeah, yeah, you know. So I don't know.
Speaker 2 (33:17):
I am very pro fiber, and I think it's great
that you can maybe get fiber in more places. But
I remained skeptical that this is more anything more than
just kind of marketing, because it's, Hey, we're a food
company that is showing declining sales.
Speaker 3 (33:35):
How can we get people excited?
Speaker 2 (33:37):
But in a different way, Okay, like, yeah, look at
all the fiber in here, as opposed to Hey, I
went to the grocery store, and I bought a cann
of beans for a dollar fifteen, and I got all
the fiber I need, and I look great.
Speaker 5 (33:52):
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Speaker 2 (35:15):
I do think that the bean is actually basically the
ultimate food, high protein, high fiber, low glycemic index.
Speaker 3 (35:24):
Which bean do you prefer?
Speaker 2 (35:25):
So I've done, I've done a bean taste test. Actually okay,
and I am very much on team kidney bean. Okay,
preferably the dark kidney beans.
Speaker 3 (35:35):
Not my chili though, but keep going. I do.
Speaker 2 (35:37):
I do darks in my in my chili, my black bean. No,
my chili is dark red kidney beans and then black beans.
Speaker 5 (35:45):
I'm a no bean and chili guy. I do two
beans in the chili, just two single beans, yes, two.
If you find them, you get ten dollars. That's the goal.
Is silver, the new gold. This is the question that's
posed by the Financial Times, Paul, Have you been practicing
any alchemy lately?
Speaker 4 (36:03):
I haven't, but I'm so glad you guys did that
being a little sidetrack because there was a tickle on
my throne and I was just barely holding on. So
perhaps it was one that didn't want to go down.
Silver has been woo crushing it, just absolutely crushing it
this year. Gold's up sixty percent year to date, and
(36:24):
silver over the last I believe trailing twelve months has
doubled in price. And so if you're in Germany and
looking forward to your collective commemora of silver coins at
the Christmas issuance of the Three Wise Men, unfortunately that
has been canceled this year cancels. Prices have swelled so
much on those coins.
Speaker 3 (36:45):
Why didn't they just raise the prices.
Speaker 4 (36:49):
Well, they're giving them out, Oh they give them yes, yeah,
so they're eating the cost of the double cost.
Speaker 3 (36:55):
Oh god, yes.
Speaker 4 (36:59):
Germany's finance ministry took a remarkable step and canceled the
long planned Christmas issuance of the Three Wise Men. It's
a commemorative silver coin and a second less festive silver
token celebrating monoails.
Speaker 3 (37:13):
Monoails, What is that? What is happening here? Great question?
Speaker 2 (37:23):
So yeah, look, here's the thing. I don't know anything
at all about how these silver market actually functions. It
is not something where I am educated in any way,
shape or form, and I know enough to know that
there are plenty of different games that can be played
in markets, and if you don't understand, you're best not
commenting on it or participating in them. And so that's
(37:43):
generally the way that I tend to go. Having said that,
from you know, talking with people that are more knowledgeable
than myself in that area, it does seem like there
is a real industrial squeeze because there just is not
enough silver that's being produced and that's driving this in
addition to some retail speculation. Eventually, both of those things
(38:04):
do end up breaking, and generally in commodity markets, those
breaks don't end well. But I have no idea when, where,
or how that will be. Let's take a quick break
when we return our two coming up in just a
little bit.
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